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HOLLYWOOD – No issue has dominated Hollywood this year quite as much as the fear that its very patrimony — the movie and TV production that pays the bills and makes the stars — is fleeing to places where filming is easier on producers’ wallets.

There is a certain amount of hysteria attached to the subject, fueled by doomsayers who cry that, at the current rate of production flight — or the more favored term, runaway production — industry workers by the thousands would be reduced to begging for crumbs, driving cabs or jumping off tall buildings. All but the highest-paid actors, producers and directors, the scenario goes, will be left behind in the departing stampede.

Driven by such hypotheses, coalitions were formed, rallies held and tax-credit proposals drawn up, all in an effort to stem the tide of runaways to Canada, Australia and other inducement-friendly nations.

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“They’re doing everything they can to suck up our business,” says Congressman Xavier Becerra (D-Los Angeles), a proponent of federal tax relief for the motion-picture industry. “All we’re trying to do is compete so that we don’t let them steal our business right before our eyes.”

And yet California remains the unquestionable capital of the worldwide movie and TV industry, with close to $30 billion in annual production spending, a figure that leaves every other area scrambling in the dust. An additional $8 billion is spent yearly in the rest of the United States. (Canada, meanwhile, generated a mere $1.3 billion last year; although it cannot be disputed that its production industry is on a serious roll.)

Anyone who wonders whether Los Angeles is becoming a ghost town has only to wander around downtown on any given weekday. Almost invariably, a few streets are blocked off for filming, with the ubiquitous, neatly parked honey wagons and dressing-room trailers announcing immediately that somewhere nearby is a camera, a crew and an actor or two.

Most studio lots — though by no means all — are humming, with much of the slack from the drop-off in features being taken up by TV productions, commercials and musicvideos.

By the end of this year, an estimated 493 movies will have been shot on Los Angeles location, down marginally from 519 in 1998, according to figures from the Entertainment Industry Development Corp., which issues permits for off-lot shooting.

“We’ve looked at the production slates for the major studios and other outfits around the world and they’re down, too,” says Mike Bobenko, a senior veep at the EIDC, referring to the general retrenchment affecting the industry on a global level.

In the television arena, 544 productions will have been shot in the L.A. area, down from 573 last year. It is in TV, after all, that most of the losses to Canada and elsewhere have been felt.

But most big-ticket feature directors continue to use L.A. as a backdrop — even if sometimes it’s disguised as someplace else: “Austin Powers: The Spy Who Shagged Me,” “Inspector Gadget,” “The Bachelor,” “Town and Country,” “Blue Streak,” “The Man on the Moon,” “Space Cowboys” and “The Grinch Who Stole Christmas,” among many others, filmed all or some of their footage in town.

“The fact is that almost everything is shot here,” Bobenko says. “Even when filmmakers go on location to New York or North Carolina or other places that have a viable filming atmosphere, they come back here and do a lot of pickup shots and certainly a lot of post-production.”

For instance, he says, the “Mission: Impossible 2” production, back from Australia, is shooting at Los Angeles Center Studios, a new facility downtown that opened earlier this year and is running at capacity.

“Our understanding is they came back here because they needed to complete a few of the scenes more quickly than they were able to do it in Australia,” Bobenko says.

Also before the cameras at Los Angeles Center Studios — which is in the process of expanding its soundstage space — are USA Films’ “One Night at McCool’s” and Miramax’s “Bounce.”

During a recent meeting, the location and unit production managers of “The X-Files” — a series that spent several years shooting in Vancouver, Canada, before returning to L.A. in 1998 — told Bobenko that the producers are “very pleased with the looks that they’re able to get in the L.A. area.”

The show, they told him, “has a more featurey look” and was being helped immeasurably by the ease with which a variety of locales can be duplicated in Hollywood.

“They can shoot L.A. for Virginia, for Washington, D.C. — we have all of that here,” Bobenko says.

If a director wants to replicate a Middle American residential street, he’ll use Hancock Park or Orion Avenue in Van Nuys. The old Victorian houses in Angeleno Heights, northwest of downtown L.A., are often used to emulate hilly San Francisco. Vermont Avenue has subbed for New York’s Greenwich Village, and Westwood for an average metro commercial-business district.

It’s downtown L.A. that gets the bulk of the work, however, primarily because there has been little renovation to many of its older buildings, making them ideal for urban street scenes that recall New York, Chicago or other American cities.

For the Arnold Schwarzenegger “End of Days,” which required a downtown New York look, director Peter Hyams used Spring, Main, 4th and 7th streets.

“We closed down Spring and 4th streets for three days for them, during the week,” says EIDC spokesman Morrie Goldman. “You couldn’t do that in New York, that’s for sure.”

The “End of Days” crew also used one the former aircraft hangars built by Howard Hughes at Playa Vista to set up a labyrinth of tunnels. In the same building, Hangar 45, director John Dahl is shooting “Squelch,” for New Regency Prods. and 20th Century Fox.

Elsewhere on the former Hughes Aircraft plant near Los Angeles Intl. Airport, Disney recently vacated a warehouse where, for almost six months, crews were building sets for “Gone in 60 Seconds,” a heist pic with Nicolas Cage and Angelina Jolie.

Paradoxically, DreamWorks is also using soundstage space at Playa Vista, which was to have been the site of Steven Spielberg’s own studio campus until he and partners Jeffrey Katzenberg and David Geffen, citing mounting costs, pulled the plug on the project in July.

Negotiations between DreamWorks and the developers who own the site had dragged on for more than three years, leaving considerable bad blood in their wake, but this hasn’t stopped the studio from renting the south bay of the Spruce Goose hangar until the end of the year for work on Robert Zemeckis’ “What Lies Beneath,” starring Harrison Ford and Michelle Pfeiffer.

DreamWorks, whose headquarters are on the Universal lot, has not decided whether to build soundstages anywhere, although an option being considered is the expansion of its animation facility in Glendale.

Such decisions will remain problematic as long as there are conflicting economic signals from the Hollywood trenches. Industry watchers are keeping a close eye on shooting activity in L.A. as a gauge of Hollywood’s overall health, and many are determined to continue pressing for measures that could smooth out the bumpy ride.

On Oct. 29, the L.A. City Council agreed in principle to set up a revolving loan program that would provide gap financing to projects costing $5 million or less.

“The departure of movie and television production from Los Angeles has impacted thousands of motion picture industry workers who have been left out of work,” the council’s motion began. “Favorable exchange rates and a variety of government subsidies have created a compelling financial argument for producers to take their projects to Canada and elsewhere.”

Also last month, California Gov. Gray Davis gave his blessing to a $1.8 million proposal — part of the federal Job Training Act — to retrain about 280 entertainment industry workers who have been displaced from their jobs because of advancing technology. A similar grant was approved by his predecessor, Gov. Pete Wilson, in August 1998.

But Davis and some legislative leaders in Sacramento have been less supportive of a bill that would provide tax credits to California-based TV and film productions in an effort to keep them from fleeing the state. The measure ran into trouble earlier this fall in the Senate Appropriations Committee and has since been grafted onto a tax bill due for final consideration in January.

A similar proposal in Congress is facing the same kind of difficulty, primarily because opponents have a hard time believing that glitzy Hollywood, the land of superstar salaries, needs a helping hand from the government.

The tax-break moves were prompted in large part by the results of a study, commissioned by the Screen Actors Guild and the Directors Guild of America, showing that the economic impact on the U.S. of runaway film and TV production was $10.3 billion in 1998, up more than fivefold since the beginning of the decade. The report estimated that loss of production has cost U.S. entertainment industry workers more than 60,000 full-time equivalent positions in the last three years alone.

California Assemblywoman Sheila Kuehl (D-Santa Monica), who authored one of the tax-credit bills, says it is crucial to keep educating the outside world about the economic realities of present-day Hollywood.

“The only kind of production that’s on the increase in Los Angeles,” she says, “is pornography.”

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